Chinese tourism to underpin WA’s evolving economy

Chinese tourism to underpin WA’s evolving economy

Fri, 15/12/2017 - 08:30

EXPAND: Mark McGowan wants to make WA’s economic relationship with China stronger in tourism and education Photo: Philip Gostelow


Some may think it’s convenient the state government is looking to its biggest trading partner to help diversify the Western Australian economy.

Others, more cynical types, may describe it as more of an act of desperation.

WA Premier Mark McGowan, however, says it simply makes a lot of sense.

Speaking exclusively with Australia China Business Review following his first official overseas delegation, Mr McGowan said deepening the state’s economic relationship with China was emerging as one of his government’s top priorities.

For the past three decades, the driving force of the WA economy – the resources sector – has been intertwined with China’s growth story.

As China has grown from a poverty-stricken nation just 40 years ago to become the world’s second biggest economy, billions of dollars have been invested in WA.

A massive portion of the iron ore-laden Pilbara has been exported to China, while in more recent years there has been the emergence of large-scale opportunities for oil and gas exports.

But even in that context, Mr McGowan described the relationship between WA and China as somewhat under done.

“It’s always just been talking to them about iron ore and oil and gas, and while they are very important, and I would never downplay them, we can do more,” Mr McGowan said.

“The relationship is strong, but I want to make it stronger, and particularly to leverage into areas like higher education and tourism to a greater degree

“I want us to be a strong mining and oil and gas state, but I don’t want us only to be that, I want us to be diversified.

“The strongest trading relationship we have is with China, and it’s strange to be honest, that while WA has 60 per cent of Australia’s export relationship with China, we only get a very small proportion of tourists and students.

“It doesn’t make any sense, why would a tourist or student look to Sydney, Melbourne, Brisbane or the Gold Coast, when 60 per cent of the economic relationship is with Western Australia?

“We are the same time zone, we are closer, we have some direct flights, we have a more authentic experience, in my view, if you come to WA to study or as a tourist.”

There is likely no stronger illustration of the state government’s commitment to grow the WA economy outside of the resources space than the fact that Mr McGowan’s delegation to China included more than 40 business leaders in the fields of education, science, research and tourism, but not a single mining executive.

In education, WA was represented by university vice-chancellors and senior TAFE officials, with a new digital portal launched to promote Perth as a study destination.

The website gives prospective Chinese students information about what courses are on offer at WA universities, while also providing the opportunity to contact institutions of higher learning directly to organise enrolment.

Tourism delegates included representatives from the state’s top hotel and the newly named Optus Stadium, as well as individual tourism-sector operators.

Mr McGowan said he personally met senior party officials, governors, mayors and top businesspeople on the delegation, which included events in Hangzhou and Shanghai.

“We also did some very innovative things,” Mr McGowan said.

“I launched a photographic exhibition of Western Australia at a huge art gallery in Shanghai. The photos were taken by Madam Yu, who is the wife of a former deputy premier of China.

“At the biggest art gallery in China, as soon as you walk in there is a huge exhibition of photographs of Western Australia – landscapes, buildings, beaches, and they are beautiful photographs.

“This art gallery has tens of thousands of people going through it every week, if not hundreds of thousands.”

Mr McGowan said the state government was looking closely at WA’s branding, and how it would use Tourism WA’s new destination marketing budget of $425 million over the next five years.

A new, overarching brand for WA will be launched early next year, Mr McGowan said.

“New South Wales and Victoria have single brands that they use to sell tourism, education, agriculture and manufacturing,” he said.

“We are trying to change that reputation that WA is China’s quarry, but also to leverage that reputation.

“If we’re responsible for the iron ore that’s used to build the bridges and the skyscrapers and the manufacturing facilities in China, there should actually be an interest in coming and seeing this place.”

Mr McGowan said Tourism WA’s ongoing campaigns in China would scarcely resemble previous marketing efforts, in a nod to the rapidly evolving way Chinese consumers communicate and use the internet.

“The way China works these days, it’s not about television, it’s about your iPhone – everyone gets everything from their iPhone,” he said.

“WeChat is very important, we’re doing it, and everyone needs to do it to get access to the Chinese market because that’s where the consumers are at.

“Once upon a time, when I was tourism minister 12 years ago, it was about what ads you could get on TV. It’s not like that now, it’s your iPhone.

“We put a lot of effort into that area, we met with Ctrip, we met with Alibaba; they are two of the fastest growing companies in the world, cutting edge internet sales and marketing companies that reach into the minds and hearts of hundreds of millions of Chinese people.

“We talked about how we can come up with relationships between the two of them and us, and we signed various agreements with them.”

The agreement with Ctrip, which is China’s largest online travel platform with more than 300 million registered users, has been in the works for around three years, according to the company’s head of destination marketing, Jenna Qian.

Ms Qian, who visited Perth for the first time in December last year, said Ctrip had been working closely with Tourism WA on branding activities, including the ‘Just another day in WA’ campaign, to help promote the destination.

"The partnership has been quite long term," Ms Qian told Australia China Business Review.

“On branding, we’ve also worked with airline companies to co-promote the destination.

“Qantas is one of our partners, and we also helped WA to design travel products that are best suited for Chinese consumers.

“In the future, under the MOU that was signed, I’m hoping we can deepen our partnership with WA.”

Signing an official agreement with WA fits in with Ctrip’s overarching strategy of diversifying outside of China into global markets, headlined by its acquisition of popular flight bookings app Skyscanner about 12 months ago.

“We have invested in every continent to date, but we are China based and we will grow with the Chinese traveller’s needs and follow the Chinese traveller’s footprints to go abroad,” Ms Qian said.

“That’s something we are keen to do, we want to offer our users the best experience and we also want to act as a bridge between the west and the east, to help western destinations, the outbound destinations, to understand Chinese travellers better, and at the same time to help Chinese visitors to discover more and more great destinations like Perth and WA.”

Ms Qian said adding WA to Ctrip’s list of global destinations would facilitate deeper interaction with China’s rapidly evolving outbound travellers, who are increasingly seeking more adventurous and independent experiences abroad.

In that regard, she said WA was gradually becoming a new hotspot for Chinese tourists, offering a unique experience that was difficult to replicate in other Australian cities, while also leveraging off its location in the same time zone.

“A lot of the younger consumers, people born in the 80s or the 90s, a lot of them are more athletic and consumer interests are getting very diverse,” Ms Qian said.

“I think that actually puts WA in a very good spot – Perth and the west coast definitely have a lot to offer.

“One is it is very nature based, the animals, particularly the Quokka, are pretty unique.

“And also, there are the Pink Lakes, they are something that attracts quite a lot of Chinese.

“It’s quite romantic and they are very picturesque – being able to share beautiful pictures on social media is something that’s quite important to consumers in today’s new media era.

“And WA is a very laid-back region; it can be quite good for family getaways.”

Ms Qian said the biggest barrier to growing visitation to WA by Chinese tourists was its airline connections, with just two airlines offering direct flights between Perth and China and Hong Kong – China Southern Airlines and Cathay Pacific.

Mr McGowan met with officials from China Eastern Airlines on his China visit, securing a commitment from Asia’s second largest airline that it would trial direct flights between Shanghai and Perth by as early as October next year.

WA Tourism Minister Paul Papalia also met with China Southern while in China, with meetings focused on increasing the airline’s Perth-Guangzhou service from five days per week to seven.

“One thing that is critical for any area’s development is flight routes,” Ms Qian said. “If there are no flight routes, that will naturally put any destination into more of a less-known spot.

“I know WA is working very actively in that space, the Shanghai area is probably the number one source market in China for Australia, and it is also a more mature market in terms of consumer behaviour.

“If consumers will be able to get direct flight services to WA, that will generate a huge boost for the region’s development.”

Alipay Australia and New Zealand country manager George Lawson said Alibaba Group also saw massive potential in the opportunity to increase Chinese visitation to WA.

Mr McGowan met with Alibaba Group’s Australia and New Zealand managing director Maggie Zhou on the delegation, to discuss how WA could tap into the 549 million monthly users on the company’s retail marketplaces.

 “The Chinese tourism market is an incredible opportunity for WA,” Mr Lawson said.

“Over the next year we expect to welcome roughly 1.5 million Chinese visitors to Australia, and by 2026, this number is expected to be in excess of 3 million.

“However, as it stands, Chinese visitors are opting to visit Sydney, Melbourne and the Gold Coast, and aren’t necessarily thinking about WA as their preferred travel destination.

“WA attracts just 3.7 per cent of Chinese visitation to Australia and only 6 per cent of Chinese students studying in Australia choose to attend Western Australian universities.

“This should be seen as an opportunity – WA has so much to offer Chinese visitors from its world-class eateries to breathtaking natural scenery and one-of-a-kind beaches.”

Mr Lawson said the next step would be to promote that offer better, through partnerships like that which was signed with Alibaba.

He said one strategy that would give WA a comparative advantage would be to encourage local businesses to adopt payment platforms preferred by Chinese, including Union Pay, WeChat Pay and Alibaba’s Alipay.

“For Australian businesses, particularly airports, tourism operators, hotels and restaurants, accepting Alipay removes friction at the point of sale and opens a sophisticated marketing channel,” Mr Lawson said.

“With Alipay, WA businesses can engage with customers before, during and after their visit through promotions and discounts.

“If WA were able to use Alipay to encourage every Chinese visitor to stay for one additional night, the economic impact would be tremendous.

“Every time a Chinese person travelling to Australia opens their Alipay app, they should see dozens of WA businesses promoting their offer.

“When we get to that point, I have no doubt the state’s visitor numbers will surge.”

Mr Lawson said while Mr McGowan’s trip to China was an important platform to sell the state, the government and the tourism sector needed to realise that engagement with China was more about leveraging the opportunities that were there than overcoming challenges.

“However, it is very much up to local businesses to embrace the China opportunity and capitalise on it,” he said.

“WA should be thinking about how it markets the entire state to ensure every Chinese visitor builds a trip to the west into their itineraries.

“A great example of this being done effectively is Christchurch Airport’s promotion of the South Island of New Zealand.

“They understand that if they can sell the experience and products on offer from the entire region, they will have more Chinese visitors touching down on their runways every year.

“They have helped band together thousands of small businesses and are experiencing tremendous growth on the back of that.”